Article written by Roger Gilroy
Automakers shut down in mid-March as the novel coronavirus threatened employees’ health, then disrupted vehicle production and supply chains. Many freight companies were suddenly without key customers.
Circle Logistics, a freight broker, was one of those companies — but it countered the stress by eventually creating a bulk division to deliver tankers of ethanol, the key ingredient in hand sanitizer, which quickly was in short supply.
“The majority of what we do here in Fort Wayne [Ind.] is really based around the automotive industry. Once the coronavirus hit, a lot of what we did really took a real hit,” Stuart Mitchell, Circle’s director of business development, told Transport Topics.
Meanwhile, some automakers shifted to produce ventilators for hospitals treating patients with COVID-19, and Circle began to broker shipments of that equipment. Breweries began to make hand sanitizer, and Circle saw that as a bigger opportunity.
It formed its bulk division.
“It kind of happened really quickly,” Mitchell said. “We kind of fell into it with one customer and then it exploded from there.”
It may have been quick, but it wasn’t easy.
“There is a lot that goes on behind the scenes that people don’t see — the late nights of carrier sourcing, calling up the carriers, establishing relationships, making sure the lane works for them,” he said. “Ultimately, we have to make sure the carrier and the driver are happy because without them, none of this happens.”
Circle Logistics ranks No. 43 on the Transport Topics list of the top freight brokerage companies in North America.
Bulk shipments, however, are not an untapped market, he added.
Larger brokers than Circle already have bulk divisions — including the two largest, C.H. Robinson Worldwide and Total Quality Logistics.
“So you really have to be cost-efficient on it once you go to the customer and provide a rate,” Mitchell said.
Meanwhile, to expand sourcing of ethanol, the Food and Drug Administration on March 27 issued a temporary policy for the preparation of certain alcohol-based hand sanitizer products.
But on April 15, the policy was tightened to require producers to supply only what FDA deemed food or pharmaceutical grade ethanol that had undergone screening for potentially harmful impurities.
The April change amounted to “regulatory whiplash” for the already battered ethanol industry, Brian Jennings, CEO of the American Coalition for Ethanol, wrote to FDA.
“COVID-19 has caused staggering damage to the U.S. ethanol industry. Plummeting motor fuel demand has idled more than half of the industry’s productive capacity, forcing many producers to shut down entirely. For those still in operation, the ability to devote a portion of their alcohol production for use as sanitizer helps keep some of their workforce employed and enables them to donate to health care workers and community organizations,” Jennings wrote.
Circle had found ethanol suppliers in South Dakota, Wisconsin and Nebraska, Mitchell said. It had tanker loads delivered, for instance, to packagers that used to supply cannabidiol, or CBD, made from hemp, but were making hand sanitizer. They already have the lines in place, and it’s an easy transition for them, Mitchell said.
Circle is working to expand its bulk business and add drivers and people in operations and a couple in sales, he said.
“You are going to have people who are going to want hand sanitizer for the foreseeable future. I think hand sanitizer is going to play a big part in what we do across the U.S., and globally. There was a shortage early on, and there still is,” he said.
At the same time, auto production in North America is stirring back to life. General Motors Co. opened some lanes May 11, Mitchell said. Ford will return May 18. Fiat Chrysler Automobiles said May 12 it has prepared its North American plants to reopen, but did not mention a date.
Mitchell added: “The automotive business has been our bread and butter for years. We understand it inside and out. We are ready for that to come back, up and running.”